By Adedapo Adesanya
Crude prices slumped on Monday after the Christmas break despite positive indicators such as vaccine approvals in the United Kingdom and the signing of the United States’ stimulus bill.
During the session, the Brent crude lost 37 cents or 0.73 per cent to trade at $50.92 per barrel while the US benchmark West Texas Intermediate (WTI) crude futures moved down by 1.1 per cent or 53 cents to trade at $47.70 per barrel.
Oil was expected to rise as the UK is set to grant regulatory approval to another COVID-19 vaccine as reports noted that Britain’s drug regulator could clear the shot produced by AstraZeneca Plc and the University of Oxford for use as early as this week.
The AstraZeneca shot would likely be rolled out next week if approved in the next few days and would be added to the Pfizer-BioNTech vaccine, which has so far been given to 600,000 in the UK, according to government statistics.
The Oxford-AstraZeneca candidate would allow the country to significantly ramp up its inoculation program, given its development in the UK. It’s also much cheaper than others and does not need to be kept at ultra-low temperatures.
Despite this, the oil market refused to sway in the expected direction even following the passing of the US stimulus bill into law.
President Donald Trump signed the long-awaited bill containing $900 billion of virus relief that’s expected to boost energy demand in the world’s largest economy. He had previously expressed his displeasure with the package that Congress approved last week.
The massive bill includes $1.4 trillion to fund government agencies through September and contains other end-of-session priorities such as money for cash-starved transit systems and an increase in food stamp benefits.
Also, the market will be expecting the next possible outcome as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) prepares to meet next week (January 4).
Indications of changing sentiment among its members on their previously-agreed cuts are being watched closely.
The OPEC+ alliance plans to return 500,000 barrels a day of output to the market from January.
Traders are weighing the demand risk of more travel restrictions as a result of a new mutation in the coronavirus, against optimism over vaccine rollouts, which will eventually boost energy demand.
There are also reports that the new variant is stalling the economic recovery in some parts of Asia.
President Trump, meanwhile, has raised geopolitical tensions in the Middle East, accusing Iran of being responsible for a rocket attack near the US embassy in Baghdad.
The country’s Foreign Ministry said the claims were baseless while the country’s oil minister said this month that Iran was planning to double its production in 2021, which will clash with OPEC+ efforts to gradually increase supply without flooding the market.